Question 1

Figure 16-5
 
-Refer to Figure 16-5.Which of the graphs shown would be consistent with a firm in a monopolistically competitive market that is doing its best but still losing money?

Accepted Answer

A)   panel a
B)   panel b
C)   panel c
D)   panel dE) All of the above
F) B) and C)

Question 2

Economists defend brand names as useful to consumers because brand names

Accepted Answer

A)   provide consumers with information about quality when quality cannot easily be judged in advance of purchase.
B)   give firms a financial incentive to maintain the high quality associated with their brand name.
C)   convince consumers to spend more for products nearly identical to generic versions.
D)   Both a and b are correct.E) A) and B)
F) None of the above

Question 3

Table 16-6
Traci's Hairstyling is one salon among many in the market for hairstyling. The following table presents cost and revenue data for haircuts at Traci's Hairstyling.
 
-Refer to Table 16-6.If the government required Traci's to produce at the efficient scale of output,how many haircuts would Traci's sell?

Accepted Answer

A)   either 3 or 4
B)   either 4 or 5
C)   either 5 or 6
D)   either 6 or 7E) A) and D)
F) B) and C)

Question 4

The deadweight loss that is associated with a monopolistically competitive market is a result of

Accepted Answer

A)   price falling short of marginal cost in order to increase market share.
B)   price exceeding marginal cost.
C)   the firm operating in a regulated industry.
D)   excessive advertising costs.E) B) and D)
F) C) and D)

Question 5

In which of the following markets is economic profit driven to zero in the long run?

Accepted Answer

A)   oligopoly
B)   monopoly
C)   monopolistic competition
D)   cartelsE) A) and C)
F) A) and B)

Question 6

In a monopolistically competitive market,the number of firms adjusts until economic profits are driven to zero.

Accepted Answer

A) True 
 B)False

Question 7

Scenario 16-3
Suppose market demand for a product is given by the equation P = 20 - Q. For this market demand curve, marginal revenue is MR = 20 - 2Q.
-Refer to Scenario 16-3.If the marginal cost of producing this good is 4,what price would a profit-maximizing monopolist charge for the product?

Accepted Answer

A)   P = 4
B)   P = 10
C)   P = 12
D)   P = 20E) All of the above
F) C) and D)

Question 8

Firms in monopolistically competitive markets and monopolies can earn long-run profits due to barriers to entry.

Accepted Answer

A) True 
 B)False

Question 9

The primary claim of defenders of advertising is that it

Accepted Answer

A)   conveys information about firm profitability.
B)   is psychological rather than informational.
C)   enhances the information available to consumers.
D)   reduces the elasticity of demand for a firm's product.E) B) and D)
F) A) and B)

Question 10

Critics of advertising argue that in some markets advertising may

Accepted Answer

A)   attract products of lower quality into the market.
B)   attract less informed buyers into the market.
C)   decrease elasticity of demand allowing firms to charge a larger markup over marginal cost.
D)   enhance competition in markets to an unnecessary degree.E) A) and D)
F) B) and C)

Question 11

When existing firms lose customers and profits due to entry of a new competitor,a

Accepted Answer

A)   predatory-pricing externality occurs.
B)   consumption externality occurs.
C)   business-stealing externality occurs.
D)   product-variety externality occurs.E) B) and D)
F) None of the above

Question 12

Figure 16-3
 
-Refer to Figure 16-3.Which of the following will occur in the long run in this industry?

Accepted Answer

A)   Firms will exit this industry.
B)   Firms will enter this industry.
C)   This firm will continue to earn positive economic profits.
D)   This firm will incur losses.E) None of the above
F) All of the above

Question 13

Figure 16-8
The figure is drawn for a monopolistically-competitive firm.
 
-Refer to Figure 16-8.Efficient scale is reached

Accepted Answer

A)   at 100 units.
B)   between 100 and 133.33 units.
C)   at 133.33 units.
D)   beyond 133.33 units.E) A) and D)
F) None of the above

Question 14

Figure 16-7
The lines in the figures below illustrate the potential effect of entry and exit in a monopolistically competitive market on either the demand curve or the marginal cost curve of existing firms.
 
-Refer to Figure 16-7.Which of the diagrams illustrates the impact of some existing firms leaving the market?

Accepted Answer

A)   panel a
B)   panel b
C)   panel c
D)   panel dE) B) and D)
F) A) and B)

Question 15

"In a long-run equilibrium,price is equal to average total cost." This statement applies to

Accepted Answer

A)   competitive markets, but not to monopolistically competitive markets or monopolies.
B)   competitive and monopolistically competitive markets, but not to monopolies.
C)   competitive markets, monopolistically competitive markets, and monopolies.
D)   None of the above is correct.E) A) and B)
F) A) and C)

Question 16

A monopolistically competitive market is like both a competitive market and a monopoly in that firms in all three market structures

Accepted Answer

A)   can earn economic profits in the short run.
B)   can earn economic profits in the long run.
C)   charge a price above marginal cost.
D)   All of the above are correct.E) All of the above
F) A) and C)

Question 17

Olivia consumes Pepsi exclusively.She claims that there is a clear taste difference and that competing brands of cola leave an unsavory taste in her mouth.However,in a blind taste test,Olivia is found to prefer generic store-brand cola to Pepsi eight out of ten times.The results of Olivia's taste test would reinforce claims by critics of brand names that

Accepted Answer

A)   consumers are always willing to pay more for brand names.
B)   brand names cause consumers to perceive differences that do not really exist.
C)   brand names cause consumers to be more sensitive to product differences.
D)   brand names are a form of socially efficient advertising.E) C) and D)
F) A) and D)

Question 18

A firm is a price taker

Accepted Answer

A)   only when the market is perfectly competitive.
B)   only when the market is perfectly competitive or monopolistic.
C)   only when the market is perfectly competitive or monopolistically competitive.
D)   when the market is perfectly competitive, monopolistically competitive, or monopolistic.E) A) and C)
F) All of the above

Question 19

What is meant by the term "excess capacity" as it relates to monopolistically competitive firms?

Accepted Answer

Monopolistically competitive f...

Question 20

Table 16-4
This table shows the demand schedule, marginal cost, and average total cost for a monopolistically competitive firm.
 
-Refer to Table 16-4.Which of the following is likely to happen in the long run in this market?

Accepted Answer

A)   The market is currently in a long-run equilibrium.
B)   The market price is likely to fall.
C)   Firms are likely to enter the market since firms are earning a positive economic profit.
D)   Firms are likely to leave the market since firms are earning a negative economic profit.E) A) and B)
F) None of the above

Exam 16: Monopolistic Competition.

In which of the following markets is economic profit driven to zero in the long run?

Correct Answer
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Table 16-4 This table shows the demand schedule, marginal cost, and average total cost for a monopolistically competitive firm. -Refer to Table 16-4.Which of the following is likely to happen in the long run in this market?

Correct Answer
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The primary claim of defenders of advertising is that it

Correct Answer
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"In a long-run equilibrium,price is equal to average total cost." This statement applies to

Correct Answer
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Correct Answer
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When existing firms lose customers and profits due to entry of a new competitor,a

Correct Answer
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Figure 16-8 The figure is drawn for a monopolistically-competitive firm. -Refer to Figure 16-8.Efficient scale is reached

Correct Answer
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Figure 16-3 -Refer to Figure 16-3.Which of the following will occur in the long run in this industry?

Correct Answer
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Economists defend brand names as useful to consumers because brand names

Correct Answer
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Scenario 16-3 Suppose market demand for a product is given by the equation P = 20 - Q. For this market demand curve, marginal revenue is MR = 20 - 2Q. -Refer to Scenario 16-3.If the marginal cost of producing this good is 4,what price would a profit-maximizing monopolist charge for the product?

Correct Answer
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The deadweight loss that is associated with a monopolistically competitive market is a result of

Correct Answer
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Correct Answer
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What is meant by the term "excess capacity" as it relates to monopolistically competitive firms?

Correct Answer
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Monopolistically competitive f...
View Answer

Firms in monopolistically competitive markets and monopolies can earn long-run profits due to barriers to entry.

Correct Answer
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Critics of advertising argue that in some markets advertising may

Correct Answer
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Figure 16-5 -Refer to Figure 16-5.Which of the graphs shown would be consistent with a firm in a monopolistically competitive market that is doing its best but still losing money?

Correct Answer
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A firm is a price taker

Correct Answer
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In a monopolistically competitive market,the number of firms adjusts until economic profits are driven to zero.

Correct Answer
verified

A monopolistically competitive market is like both a competitive market and a monopoly in that firms in all three market structures

Correct Answer
verified

Exam 16: Monopolistic Competition.

In which of the following markets is economic profit driven to zero in the long run?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Table 16-4 This table shows the demand schedule, marginal cost, and average total cost for a monopolistically competitive firm. -Refer to Table 16-4.Which of the following is likely to happen in the long run in this market?

Correct AnswerverifiedShow Answer

The primary claim of defenders of advertising is that it

Correct AnswerverifiedShow Answer

"In a long-run equilibrium,price is equal to average total cost." This statement applies to

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

When existing firms lose customers and profits due to entry of a new competitor,a

Correct AnswerverifiedShow Answer

Figure 16-8 The figure is drawn for a monopolistically-competitive firm. -Refer to Figure 16-8.Efficient scale is reached

Correct AnswerverifiedShow Answer

Figure 16-3 -Refer to Figure 16-3.Which of the following will occur in the long run in this industry?

Correct AnswerverifiedShow Answer

Economists defend brand names as useful to consumers because brand names

Correct AnswerverifiedShow Answer

Scenario 16-3 Suppose market demand for a product is given by the equation P = 20 - Q. For this market demand curve, marginal revenue is MR = 20 - 2Q. -Refer to Scenario 16-3.If the marginal cost of producing this good is 4,what price would a profit-maximizing monopolist charge for the product?

Correct AnswerverifiedShow Answer

The deadweight loss that is associated with a monopolistically competitive market is a result of

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

What is meant by the term "excess capacity" as it relates to monopolistically competitive firms?

Correct AnswerverifiedMonopolistically competitive f...View AnswerShow Answer

Firms in monopolistically competitive markets and monopolies can earn long-run profits due to barriers to entry.

Correct AnswerverifiedShow Answer

Critics of advertising argue that in some markets advertising may

Correct AnswerverifiedShow Answer

Figure 16-5 -Refer to Figure 16-5.Which of the graphs shown would be consistent with a firm in a monopolistically competitive market that is doing its best but still losing money?

Correct AnswerverifiedShow Answer

A firm is a price taker

Correct AnswerverifiedShow Answer

In a monopolistically competitive market,the number of firms adjusts until economic profits are driven to zero.

Correct AnswerverifiedShow Answer

A monopolistically competitive market is like both a competitive market and a monopoly in that firms in all three market structures

Correct AnswerverifiedShow Answer

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Monopolistically competitive f...
View Answer

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